DURBAN, 20 July 2000
Chairperson
Ladies and gentlemen,
Thank you for inviting me to address this important event. This event has become so prestigious that when job applicants apply for jobs in the Department of Labour, they include in their c.v's how many Labour Law Conferences they have attended.
You have asked me to address you this morning on a very critical topic: "Labour market regulation and employment creation". It is correct, Chairperson, that we get to grips with the relationship between labour market regulation and employment creation.
From the very onset let me state that there are some imperatives that cannot be ignored if we are to realize the objectives of employment creation and balanced labour market regulation. These are: clear policy direction, well developed strategies, political commitment and social partner 'buy- in' in respect of such strategies and mechanisms to ensure the successful implementation of agreed upon strategies. At the centre of this there lies efficiency, flexibility, equity and improved welfare. Indeed the challenge of employment creation has reached a stage where neither government, labour nor business can afford to spare any effort towards finding a lasting solution.
As we tackle important topic legends are afloat either based on an assumption that if labour laws did not exist we would have a booming economy or if labour laws were stronger we would have more jobs. If this were true, then our job would be an easy one. But the fact of the matter is that we are placing far too much weight on the role of labour laws and labour market regulation in relation to employment creation.
The new labour laws have not created the high unemployment that this country is facing. The unemployment crisis began long before the new labour laws were passed and promulgated. The reasons for high unemployment relate to the structural nature of our economy, processes of globalization, inherited rigidities and other factors which have been a subject of debate for sometime now.
Present impediments to employment creation
While it is important that we learn lessons from our unfortunate past which landed us where we are today, it is important that we guard against being the captives of the past. It is in this regard that I implore our partners to jointly and individually, explore what opportunities are there to address employment creation. Allow me to single out three impediments to employment creation in South Africa.
Firstly, the South African economy suffers from a chronic shortage of skilled labour. This has negative consequences in terms of economic growth and may have hindered the development of more labour intensive sectors.
It is the lack of skilled labour that prevents us from moving up the value chain to compete at the more profitable middle and higher levels of the market. It is the lack of skilled labour that holds back productivity advances at an enterprise level.
Ladies and Gentlemen, if we are to grow and occupy our rightful place among the nations of the world in this era of the information and communication revolution, new areas of employment growth for South Africa can no longer be confined to unskilled and cheap labour. They need skilled workers and the lack of skilled workers is one of the biggest obstacles to employment growth in South Africa at present.
Secondly, there is a lack of investment, both locally and foreign direct investment. Linked to this is a lack of investor confidence. Negative perceptions about the labour market may contribute to shaping investor views but so does crime, the HIV/AIDs epidemic, recent events in Zimbabwe and long standing Eurocentric views of Africa.
The unfortunate loss of the SA 2006 bid, was yet another reminder that we have to face the stark reality that there are long standing negative views of Africa as the continent of war, pestilence and disaster.
In the face of all those negative perceptions who will deny that time for change has come for some of our compatriots and even some of our partners who have thus far remained consistent in bad mouthing their government and our labour laws to investors. We all stand to benefit from an investor friendly South Africa.
Thirdly, there is a lack of innovation and dynamism at an enterprise and even sector level. The Department of Trade and Industry offers a wide range of incentive schemes to local manufacturers. However funds to promote innovation, research and exports remain so insignificant that they can hardly have the impact that can make South Africa a world player we envisage.
The introduction of the new LRA in 1995 anticipated that by now, bargaining councils would have industrial policy forums, enterprises would have workplace forums and wage bargaining would be placed on a multi-year basis freeing time for trade unions and employer organizations to negotiate and consult on a wider range of issues to promote employment growth. Unfortunately this has only occurred to a minimal extent.
Employment creation
How do we address these impediments to employment creation. How do we become a winning nation? I believe that critical to employment growth is firstly, to have strategies: national strategies, sectoral strategies and enterprise level strategies. Secondly, there needs to be political commitment and buy in from all major stakeholders to that strategy.
Thirdly, there needs to be the tools, resources and measures in place to ensure that the strategies are successfully implemented. I will address each of these in turn.
Strategies to create employment and growth
I believe that we have a broad strategy and/or are refining appropriate strategies. Some of the fundamental aspects of our strategy were developed and endorsed by the Presidential Job Summit in 1998. This included an agreement on the need for economic restructuring while supporting and intensifying public works programmes to provide short-term jobs.
I am very proud to acknowledge that we have a very comprehensive skills strategy in place and is being implemented. Through a process of partnership with trade unions, employers, skills facilitators, Sector Education and Training Authorities and the European Union, the Department of Labour has crafted and is implementing a strategy that embraces workplace, sectoral and national skills plan. We have set ourselves the ambitious target of having a National Skills Plan built from the bottom up on the basis of workplace and sector skills plans by the end of this year.
In May this year, the Financial Mail called for a bold initiative in respect of skills: "a life long learning initiative". If they had spoken to me, I would have told them it is happening. We call it the Skills Revolution.
Nevertheless, I whole-heartedly agree with them when they say: "An accelerated education and training strategy is the only way to improve access to economic resources for all. Any quicker fix will be illusory…investment in education and job training will yield higher returns"
Critical to sustainable employment creation are sector industrial policies and strategies. Little publicized are successful sector strategies and supply side programmes including those in the motor and textile sectors that have been initiated and run by the Department of Trade and Industry. While there have been job losses, I believe that without these programmes in place there would have been significantly more hemorrhaging of jobs.
In the mining industry, earlier this year there was a very successful mining industry summit which agreed on wide ranging measures including in respect of beneficiation, export promotion, development of small-scale mining and rural development.
A clothing and textile sector summit will be held soon, the culmination of a three month process of interaction and negotiation between government, employer organizations and trade unions to establish a strategy to retain and create jobs in this sector.
This sector summit should be followed by processes and summits in agriculture, leather and footwear and other components of the manufacturing sector.
Services, IT, agro-industry and tourism have been identified as growth areas of the future. As government and together with our social partners we need to establish strategies to develop these sectors in a way which maximizes on sustainable employment creation.
It may require our social partners to face new challenges. As the Minister of Trade and Industry said in the NCOP in May: "For unions this means new organizing techniques and different forms of protection that need to be offered to workers"
There are also strategies which have a geographical dimension, namely the Spatial Development Initiatives and Industrial Development Zones. These are beginning to move from the drawing boards to the field in areas such as Koega, the Maputo-Development Corridor and the Wild Coast.
In respect of enterprise strategies, I am afraid that I am not sufficiently informed to comment decisively on this. However, very soon I will be in a position to release our report on the feasibility of reducing hours to a 40-hour week as required by Schedule 1 of the BCEA. The researchers investigated, inter alia, whether employers were successfully able to create more jobs by reducing hours. Watch this space, since the report will provide some interesting lessons and experiences in this regard.
Political commitment and stakeholder buy in
As I have already referred to above, our strategies have not and are not being developed or implemented by government alone.
The Presidential Job Summit, the sector summits as well as many local initiatives were products of tripartism.
This was not an expedient move by Government but out of a strongly held belief that tripartism makes for good governance. The ILO stressed this recently when they identified as one of their three related priorities for advocacy, namely that: "recognition by public authorities that the good governance of the labour market based on respect for fundamental principles and rights at work makes a major contribution to stable economic, political and social development in the context of international economic integration, the enlargement of democracy and the fight against poverty".
The same report further emphasized the role of collective bargaining: "Respect for a voice at work and genuine participation consistent with freedom of association lay the foundation for trust and co-operation in the management of change…The process of collective bargaining and social dialogue oils the wheels of change and enables prevailing agreements to be realigned in the light of changing circumstances"
In this regard, I would like to use this opportunity to welcome the establishment of the Millennium Council two weeks back. I hope and trust that it will become a meaningful forum of social dialogue. A forum that can facilitate the difficult discussions and decisions that are required, to seek, in the words of our President at the launch of the council, "enabling mechanisms to foster job creation and investment".
The President indicated that he would be 'delighted' if the council were to address issues leading to a national employment accord. I have no doubt that so would the whole country.
One of the priority agreements that we would like to see as part of a national accord is a National Productivity Agreement. An agreement that once and for all will delink productivity from an individual workers ability to work harder and longer but rather will embrace the concept of multi-factor productivity and develop links between productivity increases, skill development, job security, new employment and fresh investment.
I would like to believe that one of key outcomes of enhanced social partnership is that we speak with one voice to investors and act together to attract investment to our country. Why should the solidarity of South Africans end at soccer?
I was very impressed how the Mining Summit was used as an opportunity to show case our mining industry to the world. It demonstrated the potential that we have to be common ambassadors of our country.
In this regard business internationally will listen first and foremost to business in South Africa. I appeal to local business, you do not have to agree with all our policies but we can be more strategic in the common interest of attracting investment and addressing very pervasive negative perceptions. Let us accept that we still have difficulties with some of the new laws, but through the processes of social dialogue, we are sure to find common workable solutions. In so doing we will have started the process of building the investor confidence we need.
Finally, we need, in our endeavour to build social partnership, value and nurture the contribution of unions. I would like to agree with the Director General of the ILO, Juan Somavia who in an Internet Conference on Organised Labour said: "Unions…have emerged as the most organized actors and the most articulate voices in society. Unions are built on values, ideals, and a vision of society in which workers' rights are recognized, and where there is stability, equilibrium and justice for everyone. Unions have been important institutions of industrial society. The mobilizing capacity of unions has been a unique asset; it is the backbone of their political influence which has helped deliver successful outcomes in terms of equity and justice to workers all over the world." This can hardly be overemphasized in our South African situation.
Ensuring the successful implementation of our strategies
Social partnership is a necessary but not sufficient pre-condition for the successful implementation of the strategies that are required above. Also required is for the state to provide the enabling environment, the incentives, the support and so on.
It is for this reason that we have incentive schemes, we have launched export councils, we have put in place an aggressive marketing strategy to brand South Africa abroad, we have negotiated multilateral and bilateral trade agreements, we are active in shaping a new round of trade negotiations and we have labour market regulation.
To return to address some of the legends I raised in the beginning of my speech. We do not set minimum wages to prevent employment. I as the Minister of Labour, I have the power to set minimum wages after extensive consultation and investigation including into whether the minimum wages set will impact negatively on job creation.
The result of this is that statutory wages are very low. In fact they are lower than the minimums reflected in October Household Surveys, proving to some extent that they are minimums not maximums and that significant numbers of workers get paid higher than the statutory minimums.
The point I want to make is that the intention of our labour laws is not to hinder employment creation. The intention of our labour laws is to ensure an environment where the interests of employees for protection and job security are balanced with the needs of employers for flexibility.
Nevertheless, as I indicated in the beginning in each legend there is a sliver of truth. To address this, over the last year and longer we have embarked upon a process of reviewing the impact of our legislative programme. We have come to the conclusion that while our policy fundamentals are sound, our laws still need refinement and modification to achieve the following objectives:
Yesterday, amendment bills to the Labour Relations Act, Basic Conditions of Employment Act and Insolvency Act were tabled in Cabinet Committee. A decision can be expected from Cabinet next week following from which the Department will publish the draft Bills for public comment and negotiations at NEDLAC.
The amendments focus on four main areas:
We consulted widely within government and with our social partners before we began drafting the amendment Bills. The process was fruitful. Nevertheless, the amendments are not a compilation of the proposals of organized business and labour. Rather, on the basis of the inputs that we have received, we have drafted amendments which we believe will contribute to good governance of the labour market and meet the objectives I outlined above.
Conclusion
In conclusion, I would like to appeal to organized business and labour, to labour lawyers and labour commentators, many of whom are gathered here today, let us have a constructive debate about the amendments which are soon to be released. Let us evaluate them carefully and establish whether or not they can promote the objectives of a more efficient and effective labour market which respects and values the rights of workers without compromising productivity. Add your contributions so that the draft amendments can be enriched before they are finally taken to Parliament.
Once more I call upon our social partners women and men who have a fundamental role to play to spare effort in making tripartism a living organism through which we will realize the noble ideals we aspire for.
I thank you